California Medicare Supplement MLR (Medical Loss Ratio) Requirement (Current)

Under the PPACA (Obamacare), individual & family health plans (IFP) as well as small group health plans (2-50 employees) in California must meet a Medical Loss Ratio (MLR) of 80% or above. This means that 80% of each dollar earned in premium must be spent on direct medical care and cannot be used for sales, marketing or administrative expenses.

Large group health plans in California (51+ employees) must meet a slightly higher MLR under PPACA of 85%.

PPACA did not impact the Medicare Supplement market and, as such, Medicare Supplement health plans for seniors and those under age 65 on Medicare are not subject to PPACA-mandated Medical Loss Ratios.

However, California Health & Safety Code Section 1358.14 does specify the Medical Loss Ratios (MLR) for California Medicare Supplement Plans.

Individual Medicare Supplement Plans must meet an MLR of at least 65% and group (employer-sponsored) Medicare Supplement Plans must meet an MLR of at least 75%.

When a carrier falls below the current California mandated MLR on Medicare Supplements, they must issue a rebate to members effected by the overcharge. See my earlier Blog regarding Anthem Blue Cross: Anthem Blue Cross Issues MLR Refunds

Currently there is no provision in California to raise the MLR on Medicare Supplement Plans. I have heard rumors, but nothing of substance. Should any potential changes in the MLR requirements for California Medicare Supplements become available, I will post a blog on it.

California Health & Safety Code 1358.14

(a) (1) (A) With respect to loss ratio standards, a
Medicare supplement contract shall not be advertised, solicited, or
issued for delivery unless the contract can be expected, as estimated
for the entire period for which prepaid or periodic charges are
computed to provide coverage, to return to subscribers and enrollees
in the form of aggregate benefits under the contract, not including
anticipated refunds or credits provided under the contract, at least
75 percent of the aggregate amount of charges earned in the case of
group contracts, or at least 65 percent of the aggregate amount of
charges earned in the case of individual contracts, on the basis of
incurred claims or costs of health care services experience and
earned prepaid or periodic charges for that period and in accordance
with accepted actuarial principles and practices.


As always, for specific information regarding health insurance and Medicare-related products, please visit my web site at the link above.


  1. Individual Medicare Supplement Plans..get 65% Medical Loss ratio earned in the case of individual contracts,it is really loss ratio standard.
    income protection


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